A Savings Incentive Match Plan for Employees (SIMPLE) individual retirement account (IRA) helps small-business owners offer retirement benefits to themselves and their employees. As with other retirement plans, SIMPLE IRAs come with tax benefits, as well as contribution limits governing the amount of money you can add to the account each year.
SIMPLE IRA contribution limits for 2025
The basic SIMPLE IRA employee contribution limit is $16,500. Those age 50 to 59 or age 64 and older can save an additional $3,500 as a catch-up contribution. Those age 60 to 63 can save $5,250 as a "super" catch-up contribution. Under the Secure Act 2.0, employees of companies with 25 or fewer employees may now contribute more than the basic limits. For these employees, the contribution limit is $17,600. The catch-up limit is $3,850 for those age 50 to 59 or age 64 and older, but remains $5,250 for those age 60 to 63.
If you also contribute to another employer-sponsored retirement plan for another job, such as a 401(k) or 403(b), the total you can save as an employee across all of those plans, including SIMPLE IRAs, is $23,500 if you are under age 50, $31,000 if you are between age 50 and 59 or age 64 or older, or $34,750 if you are age 60 to 63. (Sound familiar? This is equal to the maximum you can contribute to a 401(k).)
But that's only half of the SIMPLE IRA contribution limit equation. SIMPLE IRAs also have a separate contribution limit for employers. The employer can choose to do either a matching contribution or a nonelective contribution. This is particularly important to keep in mind if you've opened a SIMPLE IRA as a self-employed person or as an owner-employee of a small business, as you can contribute up to the maximum for each type of contribution.
SIMPLE IRA employer contribution limits for 2025
Employer contributions to SIMPLE IRAs generally follow one of 2 formulas. Employers can either:
- Contribute a dollar for each dollar you contribute, up to a maximum percentage of your compensation. For all employers, the match is up to 3%. However, under Secure Act 2.0, employers of 26 to 100 employees may allow their employees to make higher contributions provided the employer chooses to match up to 4% of employee compensation. Employers can also choose to reduce their match rate to less than 3% (provided it's at least 1%) for up to 2 out of every 5 years.
- Contribute a defined percentage of your compensation (up to maximum salary of $350,000 in 2025), no matter what you contribute. For all employers, the nonelective contribution is 2% of employee compensation. Again, employees of companies with 26 to 100 employees may make higher contributions provided the employer chooses to make a 3% nonelective contribution. It's important to note that whatever percentage an employer elects, including for themselves as the owner, applies to all eligible employees.
Additionally, the Secure Act 2.0 now allows employers to make an additional nonelective contribution to each eligible employee in a uniform manner, up to 10% of compensation or a max of $5,000.
Who's eligible to contribute to a SIMPLE IRA?
If your employer offers a SIMPLE IRA, you can generally contribute if you satisfy both of these requirements:
- You earned at least $5,000 during any 2 years before the current calendar year from the employer sponsoring your SIMPLE IRA.
- You expect you will earn at least $5,000 from them this current year.
Your company may choose to adopt a plan with less restrictive eligibility requirements.
You may meet the above criteria, but be ineligible to contribute if:
- You are covered by retirement benefits as part of a collective bargaining agreement.
- You are a not a US resident and received no US-sourced earned income.
SIMPLE IRA FAQs
What is the deadline for SIMPLE IRA contributions?
For employee deferrals, the SIMPLE IRA contributions should be made no later than 30 days after the end of the month in which they would have received them in cash. So if you defer your April pay, your employer must contribute those funds to your account no later than May 30. Employers have until their business tax filing deadline plus extensions to make the company contribution.
What companies can offer SIMPLE IRAs?
For a company to offer a SIMPLE IRA, it must have US employees, have no more than 100 employees, and have no other employer-sponsored retirement savings plans. Those who are self-employed may also open SIMPLE IRAs on their own.
Are contributions to a SIMPLE IRA made pre-tax?
Employee contributions are pre-tax through payroll deductions. This means funds are withdrawn before income taxes have been applied. Contributions and earnings then grow tax-deferred as long as they remain in the account, and withdrawals are taxed as ordinary income in retirement.